With foot traffic lagging at quick-service restaurants, chains are battling on all fronts to gain the attention of fast-food eaters.
One of the most competitive battlegrounds is breakfast. And Lake Forest-based Del Taco is preparing to unleash one of its biggest weapons on the morning grub frontline: a 17-ounce Huevos Rancheros Epic Burrito.
After testing it in the Inland Empire and Palm Springs, Del Taco plans to roll out the $4.99 breakfast burrito Thursday, March 23.
“It’s going to be one of our biggest burritos yet,” said Anne Albertine, Del Taco’s director of research and development.
The super burrito is a portable version of the classic Mexican brunch staple, stuffed with scrambled eggs (sorry, no runny eggs), chorizo, cheese, roasted chili salsa, sliced avocado and sour cream. To ensure its flavor authenticity, the burrito is lined with two 6-inch corn tortillas.
“This is a real biggie. It’ll power you up for the day,” chef Albertine said during a recent preview in the Del Taco test kitchen.
It’s one of five new breakfast items coming to the Del Taco menu as the chain steps up new menu items to stay relevant. The other items include a new orange juice brand and three egg-stuffed “rollers,” a soft taco rolled up to look like a mini-burrito.
Del Taco mentioned the new morning lineup during a Monday conference call with investors. The chain, the second largest Mexican fast-food brand by restaurant count, reported same restaurant sales growth of 5.5 percent for the fourth quarter ended Jan. 3. It was the 13th consecutive quarter of positive results.
“We believe our aggressive focus on menu development keeps the brand fresh, and gives our guests new reasons to come back,” Cappasola Jr. said in the conference with investors.
Del Taco is outperforming the fast-food industry, which has seen foot-traffic and sales lag. In February, overall sales were down 4 percent while foot traffic was down 3.9 percent, according to data by restaurant market research firm TDn2K. Fast-casual chains, a typically hot segment that includes premium quick-service brands like Panera Bread and Chipotle Mexican Grill, are also experiencing a downturn. TDn2K said fast-casual sales are down 2.8 percent, and foot traffic is down 6 percent.
Delivering new foods to keep the brand fresh is part of a four-part strategy to increase sales at Del Taco. Breakfast, available at the chain since 1983, is another key area.
For the last two years, Del Taco’s strongest sales growth has come from consumers buying during traditional breakfast hours. It now represents 12.5 percent of of the chain’s total sales.
It’s a momentum they don’t want to lose as new players have entered the breakfast market, including Irvine-based Taco Bell and Corona-based Miguel’s Jr.
Though McDonald’s and Jack in the Box have offered breakfast for years, both chains have stepped up their morning game. In September 2016, McDonald’s restaurants across the country expanded its all-day breakfast menu. That same month, San Diego-based Jack in the Box launched a ‘brunchfast’ menu.
Studies show morning meals are a bright spot in the industry.
Market research firm NPD Group said breakfast is the fastest-growing meal occasion for restaurants. In the first six months of 2016, NPD said restaurant visits were flat, with second-quarter declines in lunch and dinner visits. Breakfast and afternoon snacking, however, were the only segments showing an increase, NPD said.
As competition heats up, Del Taco said it’s turning to its wheelhouse to attract consumers: fresh food and bold flavors.
Last year, Albertine’s team introduced chorizo to the menu. It replaced under-performing sausage patties. The Mexican sausage, with hints of srirachi, came in three items: an Epic burrito ($3.99), a half-pound burrito ($3.49) and a breakfast taco ($1).
On March 23, Del Taco is expanding its chorizo offerings. Besides the Huevos Rancheros Epic Burrito, the chain is adding a $1 chorizo breakfast roller. It is among three new items Del Taco is adding to its Buck & Under at Breakfast menu, which will grow to nine items from six. The other two $1 items are an egg and cheese breakfast roller and a bacon breakfast roller.
Del Taco is also replacing Minute Maid orange juice with Simply Orange juice.
Del Taco’s research lab, like other fast-food test kitchens, has been busy creating a wide-range of food to appeal to diners with varying budgets. Epic burritos, premium salads and the recently launched Platos meals are items developed to lure “fast casual” eaters.
Epic burritos, for example, are stuffed with the same premium ingredients similarly found at Chipotle. Platos are plated entree dishes ranging in price from $6.49 to $7.49. The four new plated dishes, a first of its kind for the fast food chain, comes with a side of lime rice, pinto beans and chips. Black beans can be substituted at no extra charge.
On Monday, Cappasola Jr. told investors Platos is driving more traffic at lunch and dinner.
As of January 2016, average unit sales are $1.41 million, up from $1.2 million in 2013 – the year the chain introduced the Epic burritos. By comparison, Taco Bell’s average unit sales in 2015 was $1.46 million.
Del Taco is also pushing a fresh food strategy. Remodeled stores emphasize slow-cooked beans, and freshly chopped ingredients. At a contemporary prototype store in Irvine, tubs of pico de gallo and other fresh produce are displayed in a cooler with glass doors behind the cash register.
Going forward, new stores are likely to adopt the brand’s new look as it continues to develop stores outside its core Southern California market. Last week, the 550-unit chain announced plans to add new franchise locations in West Palm Beach County, Florida, southern Georgia and the greater Atlanta area.
On Monday, Del Taco also said it plans to expand testing of online ordering in Sacramento to Las Vegas. It also plans to experiment with food delivery in Las Vegas.
Contact the writer: nluna@scng.com
